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Bangladesh’s Trade Partners and the J-Curve: An Asymmetry Analysis

Author

Listed:
  • BAHMANI-OSKOOEE, Mohsen
  • Rahman, Mir Obaidur
  • Kashem, Muhammad

Abstract

Separating currency appreciations from depreciations and using nonlinear models in recent literature have improved discovering significant link between the trade balance and the exchange rate. We add to this growing literature by considering the experience of Bangladesh with 11 trading partners. When a linear model was used, support for the J-curve effect was present only with one small partner. However, when a nonlinear model was used, support increased to three countries including the largest partner, the U.S. which accounts for more than 12% of Bangladesh’s trade. Furthermore, the nonlinear models supported short-run asymmetry adjustment as well as short-run asymmetry effects of exchange rate changes in most cases. However, long-run asymmetric effects were limited to a few.

Suggested Citation

  • BAHMANI-OSKOOEE, Mohsen & Rahman, Mir Obaidur & Kashem, Muhammad, 2017. "Bangladesh’s Trade Partners and the J-Curve: An Asymmetry Analysis," MPRA Paper 81208, University Library of Munich, Germany, revised 07 Sep 2017.
  • Handle: RePEc:pra:mprapa:81208
    as

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    File URL: https://mpra.ub.uni-muenchen.de/81208/1/MPRA_paper_81208.pdf
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    References listed on IDEAS

    as
    1. Rose, Andrew K. & Yellen, Janet L., 1989. "Is there a J-curve?," Journal of Monetary Economics, Elsevier, vol. 24(1), pages 53-68, July.
    2. Helen B. Junz & Rudolf R. Rhomberg, 1973. "Price competitiveness in export trade among industrial countries," International Finance Discussion Papers 22, Board of Governors of the Federal Reserve System (U.S.).
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    4. Junz, Helen B & Rhomberg, Rudolf R, 1973. "Price Competitiveness in Export Trade Among Industrial Countries," American Economic Review, American Economic Association, vol. 63(2), pages 412-418, May.
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    6. Nazif Durmaz, 2015. "Industry levelJ -curve in Turkey," Journal of Economic Studies, Emerald Group Publishing, vol. 42(4), pages 689-706, September.
    7. Mohsen Bahmani-Oskooee & Artatrana Ratha, 2004. "The J-Curve: a literature review," Applied Economics, Taylor & Francis Journals, vol. 36(13), pages 1377-1398.
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    13. Mohsen Bahmani-Oskooee & Scott W. Hegerty, 2010. "The J- and S-curves: a survey of the recent literature," Journal of Economic Studies, Emerald Group Publishing, vol. 37(6), pages 580-596, November.
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    15. Bahmani-Oskooee, Mohsen, 1986. "Determinants of international trade flows : The Case of Developing Countries," Journal of Development Economics, Elsevier, vol. 20(1), pages 107-123.
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    More about this item

    Keywords

    Bangladesh; Taka; J-curve; Asymmetry Analysis; 11 Partners;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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